Small Business Getting a Handle on Financial Statements

We recently received a question from a contractor.  Here is the question and what our suggestion was for him:

Q:  I’m a small business (just me and another tech) and I don’t have anyone in the office to keep my books.  I know I should have a better handle on how my business is doing financially, but I can’t afford to hire someone.  Right now, I gauge my business success on how much money I have in the bank.  Any ideas?

A:  You are not alone.  Many contractors have the same problem that you do.  Your financial statements are a very important tool that allows you to see the following:

• How much revenue you are bringing in;
• Where you spend your money;
• How much profit you make;
• Who owes you money;
• How much you owe suppliers;
• How much cash you have;
• The amount of debt you have (loans, notes, etc)

Financial statements can identify challenges that you have in your business as well as assist you with knowing when and how to grow your business.  It is one tool that you cannot afford to go without.

So here is my suggestion:  Go to your Yellow Pages, or online, and look under bookkeeping service.  Find someone who you can outsource your bookkeeping to.  Most small businesses use QuickBooks-certified.  Make sure and ask for references and let the company know that you need to get timely information.  It will need to be able to do the following: record customer invoices and deposits made into your bank account, enter and reconcile accounts payable, reconcile your bank statement each month, and assist you with quarterly tax payments.  If they will also take care of your payroll, I highly encourage you to let them process payroll for you as well.  If they do not process payroll, look for a service such as ADP or Paychex to do it for you.  Payroll is one of the most error-prone accounting processes for small businesses.  And it can cost you thousands in penalties if you don’t process it right!

Tips for Hiring (and Retaining) the Best Employees

It is amazing the number of times I hear, “I can’t find any good employees.” It can be challenging to find good employees, but they are out there. It takes diligence to secure superstar employees from the general workforce pool. But… there is another way to add superstar employees to your team.

All it takes is the right tools and knowledge to acquire your own group of superstar employees.

Tip #1: Hire Right / Dehire Right

Everything always has to start with the right person. You can’t expect to grow a strong team with bad seeds. It all starts with proper hiring, and the first procedure is to look for a great attitude. It takes a great attitude to become a superstar in the contracting industry. Nothing will determine the success of an employee more than their ability to establish trust and rapport with clients, and that comes across in a great attitude.

Attitude is one thing that is very difficult to teach. A good attitude can and should be positively reinforced.

But a bad attitude is hard to correct — if neglected it can corrupt your entire team. Those with the right attitude are often more willing to learn. An employee who is willing to learn will be worth more to your team in the long run than the most technically or systems-educated employee with a bad attitude.

Start the search for your superstar employees by finding people with great attitudes.

Tip #2: Right Training

Once you have identified the right person, it is time to get them the right training. Let the new employee ride along with co-workers. But… BE CAREFUL… First, you should conduct ride-alongs and be sure the new rising star is not riding along with a black-hole-attitude employee.

The rising star must be given the opportunity to observe what they are supposed to be doing on each interaction with the customer and absorb what they observed. That is why it is important for you the owner/manager to conduct a ride-along with the existing employee before turning your rising star over to them.

Tip # 3: Positive Behavior Reinforcement

You have to reinforce the strengths, positive attitudes, and performance with your entire team to continually get the best results. This comes with providing your entire team with external training. Nothing says “I am willing to invest in you and your future” more to employees than investing in their continued success. Allow them to grow their knowledge base and meet other professionals that perform the same job function in a different city or state.

Tip #4: Accountability

Hold all employees accountable for performance. Let your employees know what you expect and want them to do. Make sure they are doing what they’re supposed to do. Put up goal board and update them DAILY at minimum.

Let your employees know about upcoming external training opportunities and show them the way to further their success. Conduct ride- alongs to allow your employees to demonstrate they know how to perform the job (let them show you how bright their star really is).

The way to grow a championship team year after year is to invest in the proper tools, employees, and knowledge to ensure you, your business, and your team will enjoy success in the coming years.

Stop Bailing & Start Fixing!

“I’m too busy to get anything done!” It’s a line that I hear too often from members. It’s also a thought process that can cripple a company. That one simple sentence indicates to me that you’re likely spending too much time bailing water out of a sinking ship, rather figuring out how to stop the leak.

I know there are times when you’re spending as much as 70 or 80 hours as week in your office. You start the day with a plan. You have a to-do list filled with important tasks that need to get accomplished. Yet even at the end of a long workweek, you rarely get anything checked off that list! Why is that?

Too often the items on your to-do list get pushed to the side so that you can “put out fires” throughout each day. Instead of getting things accomplished that need to be done, you’re beating yourself up to handle constant problems. Instead of fixing your company (fixing the leak), you’re trying to keep things running (you’re bailing water on a sinking ship). So, how do you reverse that trend and start fixing, rather than bailing? Here are a few critical steps:

Start Training

Most of the time when business owners are forced to deal with constant issues it’s due to the fact that their people are not trained. The phone isn’t getting answered properly, and technicians aren’t communicating well with homeowners.  Stop the problems from happening in the first place!  That means mandatory training for CCRs and technicians at least once a week – I suggest twice a week. Make role-playing a constant, and get your people to understand what’s expected of them, rather than you assuming they know.

Empower Your People

Once you’re confident your people know their jobs, get out of their way.  Don’t become a crutch. There is no reason why you should be on the phone with every single technician on every single call. You’re not a baby-sitter – you’re the boss.  If your tech makes a mistake, so be it.  There’s no reason to beat him up over it – mistakes happen.  Instead, turn it into a learning exercise at you next training meeting.

Watch Your Numbers

The common denominator in profitable companies is that the owners are looking at their numbers. Your numbers will tell you if your team members are struggling and you need to address a particular issue in training. In other words, your numbers are like the gauges of a ship. Based upon what they tell you, you will know how to best steer your company.

Running a contracting business doesn’t have to feel like you’re aboard a sinking ship with no land in sight. Stop bailing water and start looking for a way to patch that hole. That means giving your people the proper training, supporting them in their decisions, and watching your numbers. You’ll be steering away from danger and toward profitability in no time!

Keeping Your Eyes on the Road

Experts say most accidents that happen on the road are the result of driver negligence. It doesn’t take an expert to figure that out. After all, you’ve seen the usual suspects on the road. There’s “Mr. Cell Phone Talker” who’s oblivious to everything not attached to his ear. There’s “Ms. Eye Shadow Applicator” who’s trying to finish that last dab of Purple Sunrise before she hits the brakes. But with all of these offenders, the worst may be the good old-fashioned “rubbernecker.”

These are the drivers that slow down…way down… to see what everyone else is doing and what’s going on. In the process, they almost cause a wreck of their own. If there is one thing you could say to these people, it would be, “Keep your eyes on the road!”

The business world is full of these rubberneckers, too. What you do in your car is one thing, but in your business, everything can fall apart if you start taking your eyes off the road.

Here’s what I mean: In the past week, I’ve gotten several calls that started with, “My competition is this and that.” While it’s a good idea to keep an eye on your competition from time to time, it should be in your rearview mirror as you zoom past them on your way to success.

Before you get too concerned with what your competitors are doing, pay attention to what you’re doing. Keep your eyes on the road.

When Business Owner Bob gets caught up in what the competition is doing, here’s what happens: Bob starts paying more and more attention to the competition. Eventually, he stops doing what made him successful in the first place and he starts mimicking the things he thinks the competition is doing to succeed. Unfortunately, what he doesn’t see is that the competition only looks successful. Behind the scenes, that competitor is probably struggling to pay the bills, attract clients, and keep his doors open. The worst part is that Bob won’t realize this until he’s in the same shape. If he’d only stuck to what was working in the first place, he’d be in the fast lane.

It’s all about balance. You should keep an eye on your competitors to see what they are up to, but don’t get stuck staring as they zoom past you.

In the end, remember that competition is like death and taxes. It’s always there. Just expect it to be there and don’t waste your productive time worrying about it. You only have the same 24 hours a day that the competition does. Make the most of them! Don’t get caught rubbernecking on the road to success.

Making Easy Money at Your Desk

It’s a slow day in your company.  Everyone is dragging as that empty callboard stares you in the face.  It’s getting close to quitting time, and everyone is just ready to put this sales-killing day behind you.

Suddenly, your best technician walks through the door.  He has a hint of a smile on his face like he knows something you don’t.  He walks right over to your desk and puts a piece of paper down on the desk.

You pick it up slowly, expecting a resignation letter after such a slow day, when you realize it’s an invoice.  And not just any invoice.  It’s a $10,000 day-saving invoice!

Your technician just made a $10,000 sale!  You jump out of your chair and give the man a huge bear hug.  Everyone cheers!  The day is saved by the $10,000 sale!

And, it is great, but just how great is it really?

If you’re like the average contractor, you’re operating at a 3 to 4 percent profit margin.  In that case, that $10,000 monster sale netted you a whopping $300 to $400.  Not so exciting now, is it?

But here is what’s exciting.  You can gain that $300 – the profit equivalent of a $10,000 sale – and more just by making some simple tweaks from the comfort of your desk.  These profit-minded tweaks don’t require you to step foot in a truck, put in any extra hours, or even take on an additional headache.

These are stress-free dollars that drop right to the bottom line.  To get them, you just have to start buying right, and here are four simple ways to change your buying behavior so that you’re earning $300 to $400 in savings without lifting a finger:

1. 1.     Grab the discount – The easiest way to grab those savings is to pay your bills in time to grab any early pay discounts your suppliers might offer you.  If you have this option, take it!  Even if it requires some extra cash flow management, it’s worth it.
2. 2.     Work with low levels – The second strategy is to keep your stock and inventory at a low level.  This saves you the expense of the space needed to house that inventory, lessens the chance that those parts become obsolete, and limits your exposure to shrinkage.  Bottom line – it saves you money.
3. 3.     Pass the hassle, keep the savings – The best option is to have someone else manage your inventory altogether.  If you can work with your supplier or manufacturer, you may be able to get involved in a virtual inventory management program where they manage your inventory and you only pay for parts as you use them.
4. 4.     Buy smarter with a little help from your friends – This one is huge.  The biggest impact you can have on your bottom line is by buying smarter at the lowest prices possible.  Even if you’re a $1 million company, you can buy lower.  Chances are there is a $5 million guy buying at even lower prices.  And even if you’re a $20, $30, or $40 million dollar operation, there are $400 and $500 million dollar companies getting deals you wouldn’t believe.  It all comes down to the power of numbers.

The only way for the independent contractor to get the same power of numbers is to band together.  Roofers’ Success International® can help you do just that.

When you can consistently save $300, $400 or more by buying right in your business,  you’ll feel like you are tripping over the $10,000 sales every day because those savings will drop right to your bottom line every time you make a smart buying move.

Start buying smart and start earning the extra profits you deserve.